Trading Focus

Many newbies underestimate the amount of trading focus required for active trading. Trading on the surface appears to be a bunch of flashy numbers and charts moving in real-time with very little meaning. It is up to the trader to tune into what the market is saying in order to capitalize on gains. Below are some simple steps an active trader can take to improve their trading focus and performance.

1. Do not answer the phone

If you are an active trader, cut your business or home business phone off when you are trading. Even the sound of a phone ringing can break your concentration and can cause a lapse in judgment.

Phone conversations are completely out. These conversations will distract you from the task at hand, making money and cause you to lose your focus. The worst scenario is (1) you hear the phone, (2) you answer it and (3) the person you are talking to brings about negative energy or causes you to become emotional thus further breaking your concentration.

Just for another sports analogy, answering the phone is like a pro basketball player talking to someone as they shoot a free throw.

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2. Leave the Radio Off

Do not look to entertain yourself by playing your favorite cd or listening to your iPod while you trade. I know every movie displays some hacker or trader blasting their favorite tune while performing some complicated task.

However, in the real world, if you try to do this, you will lose money. Music brings about emotions, which have no business in trading.

3. Stay off the Internet

It is easy to just click the Google Chrome icon and start surfing the web. Before you know it, you are chatting over instant messenger with friends and checking the local weather. Then it occurs to you that you have a few emails to write and before you know it, a few hours have passed and the stock you were waiting to breakout did so and you missed the trade.

4. Trade Standing Up

In many brokerage firms and sales organizations, you will see brokers standing up talking on the phone. The reason for this is by being in motion, it brings the tiger out of you. When you sit reclined and relaxed it breeds apathy.

Get out of your chair, lean over the monitor, yell if you have to. But become an active participant, because if you sit back, someone out there more hungry and determined that you will take your money.

There are even desks you can buy now that you can raise, so you can still type and click away with your mouse in comfort.

5. Talk to Yourself

Talking to yourself in any other profession would be looked upon as a sign of insanity.

But in day trading, this will help you keep your trading focus. Thinking out loud will prevent you from making any sudden bonehead decisions because it is harder to follow through with something if you have to speak it into existence. Talking out loud also makes you think things through, thus letting the game come to you.

Many day traders speak of how they were doing well one minute, then out of nowhere, they put on a trade that did not meet any of their trading criteria. If you can’t be honest with yourself, who can you be honest with?

6. Review Your Rules Throughout the Trading Day

Most traders will think of their rules during off hours but not while they are trading. If you want to make sure you do not go astray, then have your rules present as you trade.

I have gone as far as to dedicate an entire monitor with my rules scrolling in a power point presentation slideshow. Sounds a bit neurotic, but trust me, you can avoid the big blunders by glancing at your rules throughout the day. It’s like looking in your side mirrors when driving.

7. Meditation

I probably should have listed this first. Actually, come to think of it, I absolutely should have listed this one first. You have to keep your calm when trading the markets.

You have to fight the urge not only to adhere to your rules but also to avoid overtrading. The funny thing about trading is when you are down and having a bad day, it’s like you can’t see the road to profits. One bad trade leads to another bad trade.

Also, if you have some big winners or go on a run, meditation will help you stop chasing trades and focus on the right things. I know it sounds like fluff or nonsense but take my word for it when I say meditation works.

8. Read Your Journal

One thing I like to do before I start trading is to read my journal. This will allow me to hear my most recent thoughts and emotions.

What does this do for me?

It provides a bit of humble pie if I’m coming off a good run or it can be a pick me up as I read about other times where the market has gotten the best of me.

Summary

These items can provide the methods for how to maintain your trading focus but you will need to develop a blueprint. Meaning you need to work on how you execute these items in order to create a repeatable process for you to prepare, plan and execute your trading business.

No matter what order you decide on, at the end of the day you can’t go wrong. Anything is better than trading with Netflix playing in the background.

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Al Hill is one of the co-founders of Tradingsim. He has over 18 years of day trading experience in both the U.S. and Nikkei markets. On a daily basis Al applies his deep skills in systems integration and design strategy to develop features to help retail traders become profitable. When Al is not working on Tradingsim, he can be found spending time with family and friends.